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Health Discovery Corporation Announces Results Of Warrant Conversion And Settlement Of The Shareholder Lawsuit

Health Discovery Corporation (OTCBB: HDVY) is pleased to announce the results of the warrant conversion related to the 2007 private placement (“2007 Private Placement”), as follows: 10,952,261 warrants out of a total of 57,677,707 remaining warrants available for exercise, representing both the $0.14 and the $0.19 tranches, were exercised on or before September 7, 2010, the expiration date.

This resulted in the Company receiving $1,654,437 of proceeds. Subsequently, 10,952,261 shares have been issued to those 2007 Private Placement warrant holders who converted their warrants.

Health Discovery Corporation is very pleased to announce that the declaratory judgment lawsuit brought by William F. Quirk, Jr., related to his 32,527,776 warrants issued pursuant to the 2007 Private Placement transaction, and the Company's counterclaim of Mr. Quirk's breach of fiduciary duty, have been settled.

Pursuant to the settlement agreement, Mr. Quirk exchanged his 32,527,776 warrants for 10,000,000 new warrants. The 32,527,776 exchanged warrants consisted of 16,263,888 warrants with an exercise price of $0.14 and 16,263,888 warrants with an exercise price of $.019. The 10,000,000 new warrants consist of three tranches; two of which are for 3,333,333 warrants each and one for 3,333,334 warrants, with strike prices of $0.20, $0.25 and $0.30, and exercise terms of 12 months, 18 months and 24 months, respectively.

In addition to the exchange of warrants, the Company will provide Mr. Quirk an exercise price adjustment equal to the fair market value of two million phantom shares. The value of this exercise price adjustment will only be applied towards the exercise of some or all of the new warrants. Mr. Quirk is limited to only using this exercise price adjustment to exercise the new warrants and will not receive cash, stock or any other benefit related to this exercise price adjustment. The exercise price adjustment expires September 22, 2012.

As a part of the settlement, Mr. Quirk has agreed to refrain from taking certain actions related to the Company’s affairs for a period of five years. Under this standstill agreement, Mr. Quirk may not (1) propose to enter into, directly or indirectly, any merger, tender offer, exchange offer, recapitalization or any other business combination involving the Company, other than any such transaction or offer approved by the Company's board of directors and publicly announced, (2) solicit proxies or consents to vote any securities of the Company, (3) engage in short selling the common stock of the Company or otherwise enter into any agreement or arrangement with any person for the purposes of short selling the common stock of the Company, or (4) act alone or in concert with others to seek to control or influence the management, board of directors or policies of the Company.

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